Unless the Middle East crisis is contained then it could hit the cost of everything from the weekly shop to your two weeks in the sun
The Middle East crisis risks crushing the green shoots of recovery which had only just begun to sprout.
Newly published research on consumer confidence – or how people are feeling – revealed a small, but welcome, improvement.mWorkers are still spooked about job security but reckon it might be getting better, along with their finances. YouGov and the Centre for Economics and Business Research’s data was from February. How quickly things change. Chances are were the same questions asked now, many people will have the collywobbles again.
And who can blame them given the dramatic scenes unfolding in the Middle East, whose shockwaves are being felt the world over. The theatre of war is happening thousands of miles away from UK shores, but its impact risks being felt by everyone of us.
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It is early days, so important not to get too carried away with the long term financial implications. But as each day goes by, and thousands of missiles rain down with no sign of an end, so the fears are that we are on the brink of another economic crisis.
Most households in Britain – as elsewhere – feel they are running to standstill financially. It’s a feeling many have had since the banking crisis and subsequent Tory-driven age of austerity. And just like then, we now face a scenario where those same ordinary households face financial pain for no fault of their own.
That’s pain at the pumps with the first signs petrol and diesel prices are rising on the back of the oil price hike. Soaring fuel prices are now a very real fear.
Then there’s the pain for borrowers, who were only just getting used to the idea that costs might actually be falling. A week ago a Bank of England rate cut later this month looked odds-on. Fast forward and that seems to have evaporated, with even talk of a possible rise. And now we’ve had the first lenders increase fixed rate mortgage costs, with more expected.
The reverberations of events in the Middle East threaten to go even deeper, with the price of everything from the weekly food shop to cost of imported goods at risk of rising. Even the cost of many families’ cherished two weeks in the sun could rise as airlines face soaring costs, with jet fuel prices in European markets jumping to a three-and-a-half year high.
Events abroad have, once again, pulled the rug from under the government. However much Labour and Chancellor Rachel Reeves may have tried to set the foundations for growth, and looked at ways to ease the cost of living burden, this latest crisis has thrown its plans into disarray.
We can only hope this time round the fall-out is contained. Let us not forget that we are still counting the cost of previous seismic events – from the financial crisis to the pandemic – which, because of government bail-outs and emergency support, mean the UK’s national debt is on track to top a mind-boggling £3trillion.
